Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 110399 August 15, 1997

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE,
President,petitioners,
vs.
HONORABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL
CORPORATION, respondents.

ROMERO, J.:
This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside
the Order of public respondent, Undersecretary of the Department of Labor and Employment, Bienvenido E.
Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91 1 entitled "In Re: Petition for Certification Election
Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao,
San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner." The Order excluded the
employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit
and ruled out their participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for
Direct Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia
Poultry Products Plants of Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election
among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San
Fernando and Otis as one bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal,
pointing out, among others, the Med-Arbiter's error in grouping together all three (3) separate plants, Otis, Cabuyao
and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are
confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent company's Appeal and
ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the
employees sought to be included in the appropriate bargaining unit.
Upon petitioner-union's motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed
for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked
as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San
Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with
Motion to suspend proceedings.

On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated
in Philips Industrial Development, Inc. v. NLRC 2 case. Said Order reads in part:
. . . Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for
purposes of collective bargaining.
In this case, S3 and S4 Supervisors and the so-called exempt employees are admittedly confidential employees and
therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the
above court's ruling. Consequently, they are not allowed to participate in the certification election.
WHEREFORE, the Motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby
modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt
employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could
participate in the certification election. 3
Hence this petition.
For resolution in this case are the following issues:
1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential
employees, hence ineligible from joining a union.
2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single
bargaining unit.
On the first issue, this Court rules that said employees do not fall within the term "confidential employees" who may
be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers
and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall,
discharge or dismiss employees. They are, therefore, not qualified to be classified as managerial employees who,
under Article 245 4 of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same
provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist
or form separate labor organizations of their own. The only question that need be addressed is whether these
employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate,
determine, and effectuate management policies in the field of labor relations. 5 The two criteria are cumulative, and
both must be met if an employee is to be considered a confidential employee that is, the confidential relationship
must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities
relating tolabor relations. 6
The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of
management policies relating to labor relations is a principal objective sought to be accomplished by the ''confidential
employee rule." The broad rationale behind this rule is that employees should not be placed in a position involving a
potential conflict of interests. 7 "Management should not be required to handle labor relations matters through
employees who are represented by the union with which the company is required to deal and who in the normal
performance of their duties may obtain advance information of the company's position with regard to contract
negotiations, the disposition of grievances, or other labor relations matters." 8
There have been precedents in this regards, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez, 9 the
Court held that "if these managerial employees would belong to or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become companydominated with the presence of managerial employees in Union membership." The same rationale was applied to
confidential employees in "Golden Farms, Inc. v. Ferrer-Calleja" 10 and in the more recent case of "Philips Industrial
Development, Inc. v. NLRC" 11which held that confidential employees, by the very nature of their functions, assist and
act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions

in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist
or join a labor union was held equally applicable to them. 12
An important element of the "confidential employee rule" is the employee's need to use labor relations information.
Thus, in determining the confidentiality of certain employees, a key question frequently considered is the employee's
necessary access to confidential labor relations information. 13
It is the contention of respondent corporation that Supervisor employees 3 and 4 and the exempt employees come
within the meaning of the term "confidential employees" primarily because they answered in the affirmative when
asked "Do you handle confidential data or documents?" in the Position Questionnaires submitted by the Union. 14 In
the same questionnaire, however, it was also stated that the confidential information handled by questioned
employees relate to product formulation, product standards and product specification which by no means relate to
"labor relations." 15
Granting arguendo that an employee has access to confidential labor relations information but such is merely
incidental to his duties and knowledge thereof is not necessary in the performance of such duties, said access does
not render the employee a confidential employee. 16 "If access to confidential labor relations information is to be a
factor in the determination of an employee's confidential status, such information must relate to the employer's labor
relations policies. Thus, an employee of a labor union, or of a management association, must have access to
confidential labor relations information with respect to his employer, the union, or the association, to be regarded a
confidential employee, and knowledge of labor relations information pertaining to the companies with which the union
deals, or which the association represents, will not cause an employee to be excluded from the bargaining unit
representing employees of the union or association." 17 "Access to information which is regarded by the employer to
be confidential from the business standpoint, such as financial information 18 or technical trade secrets, will not render
an employee a confidential employee."19
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift operations when
situations require.
2. To effectively oversee the quality control function at the processing lines in the
storage of chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct
manufacturing materials.
5. To recommend and initiate actions in the maintenance of sanitation and
hygiene throughout the plant. 20
It is evident that whatever confidential data the questioned employees may handle will have to relate to their
functions. From the foregoing functions, it can be gleaned that the confidential information said employees have
access to concern the employer's internal business operations. As held in Westinghouse Electric Corporation
v.National Labor Relations Board, 21 "an employee may not be excluded from appropriate bargaining unit merely
because he has access to confidential information concerning employer's internal business operations and which is
not related to the field of labor relations."
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to "all"
workers the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must
be strictly defined so as not to needlessly deprive many employees of their right to bargain collectively through
representatives of their choosing. 22
In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they
handle "confidential data" as such must first be strictly classified as pertaining to labor relations for them to fall under
said restrictions. The information they handle are properly classifiable as technical and internal business operations
data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a

union and the management are invariably adversarial. Since the employees are not classifiable under the confidential
type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining.
Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no
legal prohibition against confidential employees who are not performing managerial functions to form and join a
union. 23
In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants
of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out.
It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for
Cabuyao, Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, oneunion policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a
community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised of all or less
than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to
the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining
provisions
of
the
law." 24
A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours,
working conditions and other subjects of collective bargaining. 25
It is readily seen that the employees in the instant case have "community or mutuality of interests," which is the
standard in determining the proper constituency of a collective bargaining unit. 26 It is undisputed that they all belong
to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different
plants, they perform work of the same nature, receive the same wages and compensation, and most importantly,
share a common stake in concerted activities.
In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different
plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining
leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will,
in all probability, not create much impact on the operations of the private respondent. The two other plants still in
operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the
concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the mandate of the
Constitution. 27
The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan,
Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if
the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where
all non-academic rank and file employee of the University of the Philippines in Diliman, Quezon City, Padre Faura,
Manila, Los Baos, Laguna and the Visayas were allowed to participate in a certification election. We rule that the
distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs.
Neither are there regional differences that are likely to impede the operations of a single bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on
December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and
exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and
Otis as one bargaining unit is ordered conducted.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.